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Economic Sense

RSS By: Matt Bogard,

Matt's primary interest is in the biotech industry and ag policy.

Socialism vs Capitalism

Apr 11, 2009

According to a recent Rasmussen poll, only 53% of those polled say that they believe that capitalism was better than socialism, 27% were unsure, while 20% preferred socialism. Neither capitalism nor socialism were defined. But, before very many of our leaders take this as an endorsement for increased levels of government intrusion and more bailouts, they should consider, how many of these people are actual taxpayers, and how many are likely voters. They may also want to take notice of the large number of people attending proc-capitalist, anti-socialist tea parties across the country. 

Capitalism vs. Socialism
But, really if truly defined, how many people would really favor socialism over capitalism? 

According to the Blackwell Encyclopedia of Political Thought, socialism 

“generally argues that economic production has an essential social element as distinct from the individual element , and that this requires public investment and justifies a public share in the distribution of rewards”

According to economist Ludwig von Mises, there are two ‘patterns’ of socialism, the Soviet pattern and the German or Nazi Pattern. 

“where Communism seeks to substitute the state for private ownership, fascism seeks to incorporate or co-opt private ownership into the state apparatus through public-private partnership” see Liberalism vs. Fascism by Roderick T Long

 Economist F.A. Hayek’s ‘The Road to Serfdom’ is essentially a treatise on the rise of socialism in the 20th century. Wikipedia gives a good review of the book: 

“Hayek’s central thesis is that all forms of collectivism lead logically and inevitably to tyranny, and he used the Soviet Union and Nazi Germany as examples of countries which had gone down “the road to serfdom” and reached tyranny.”

 We find a description of Capitalism in the Concise Encyclopedia of Economics:
Economic individualism’s basic premise is that the pursuit of self-interest and the right to own private property are morally defensible and legally legitimate. Its major corollary is that the state exists to protect individual rights. Subject to certain restrictions, individuals (alone or with others) are free to decide where to invest, what to produce or sell, and what prices to charge. There is no natural limit to the range of their efforts in terms of assets, sales, and profits

Given this context, the choice between socialism and capitalism can be summed up as a choice between mutually beneficial cooperation with your neighbor ( under capitalism) vs, coercion and servitude in the name of the public interest ( under socialism). 

What Has Capitalism Meant on the Farm: 

When you look around ask yourself, what system is most responsible for your current standard of living. What made the following possible: 

Your tractor, combine, planter, truck etc.   – Capitalism
Your chemicals, fertilizer, and seed choices – Capitalism

Environmentally friendly cost saving and risk management technologies like Roundup Ready and Bt – Capitalism

GPS for precision ag applications and auto-steer technologies – Capitalism

Today’s yields vs. those in the 20’s - Capitalism 

The very act of planting, harvesting, and marketing a crop is – Capitalism

What has Socialism Meant to the Country as a whole: 

Social Planning of Interest Rates by the Fed: Instability, uncertainty, the housing bubble, and collapse

 Public Private Partnerships via Fannie and Freddie: Perverse incentives privatized gains and socialized losses, leading to more instability in the housing market.
CAFÉ Standards and Overzealous Environmental Regulations: Reduced supply of fossil fuels, volatility in fuel prices, $4.00 gas, bankruptcy of the auto industry.

All of these were attempts at the ‘central planning’ and have resulted in loss of prosperity and instability and huge bailouts with taxpayer money. Unfortunately, in these times, it may be leading some to think that the only answer is more government intervention. That is what is so scary about the poll results.

Matt Bogard, Economic Sense


Rasmussen Reports: Link

Concise Encyclopedia of Economics

Liberalism vs. Fascism
Mises Daily by Roderick T. Long  Link
Wikipedia- Link
The Road to Serfdom, 50th anniversary edition, University of Chicago Press, 1994
Our SubPrime Fed. Wall Street Journal August 10, 2007


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COMMENTS (2 Comments)

Matt Bogard
gbosfarm: I appreciate your comments. I think it turns out that the combination of economics and statistical evidence turns out to be very consistent with what most people would consider to be common sense. Sometimes that can be controversial.
10:21 AM Apr 14th
Matt, Keep up the great work. Your blogs are very informative, and yes, I do agree with most of what you say. I think you present common sense facts and do some great research, as well as provide great insight.
11:37 AM Apr 13th
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